Reuters announced Monday that Garmin is in talks to acquire Britain's Raymarine in a bid to buy market share in Europe. Raymarine is laden with over £96 million in debt and has been struggling to either sell the company or raise equity financing since March.
Raymarine makes fishfinders, autopilots, marine radar and GPS systems for leisure boats. Garmin's marine segment has fallen for four of the last five quarters and is expected to stay weak. The Raymarine acquisition would basically double Garmin's marine revenue as the two companies shared similar segment sales and market share in 2008.
The deal is said to be worth £20 million – a pretty good deal for Garmin since Raymarine's current Market Cap is £13.46 million. This would be a relatively low-risk consolidation play for Garmin, enabling them to cut out redundant costs, rationalize product lines, scale up manufacturing and take advantage of an expanded channel.
This will be Garmin's first acquisition of the year, after completing six last year (NavCor Oy, Fairpoint Navigation, Formar Electronics- basically many of their European distributors). Last quarter the Company generated $246 million of free cash flow to play with for acquisitions. "Raymarine gives Garmin the all-important OEM footprint," said Panmure Gordon's analyst Oliver Wynne-James.